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I'm your host, John Chidjie, and I'm joined today by my guest host, Seth Clifford.
How are you doing, Seth?
I'm doing well.
Thanks for having me back.
Yeah, and thanks for coming back on.
few more episodes to go. I'm glad you can make it on before I wrap it up.
So, yeah. Today, I'm going to put a pre-apology out to the listeners. I've had a really long
week. I've been doing a lot of driving, about 350 miles of pipeline, inspecting different
stations and so on along the way. So, I'm a little bit fatigued. The coffee is propping
me up and not wanting to speak for you, mate, but yeah, you said before you may be a little
bit tired as well.
So, apologies ahead of time for that.
So, okay.
But we want to talk about DRM, digital rights management.
And I guess I have talked about it a little bit before on the fringe.
So, I briefly touched on it recently on episode 55 when we talked about privacy, actually.
on episode 42, which was hopefully that I burn it
regarding e-readers, I sort of even more briefly
touched on it.
Going back even further, I've discussed some of the elements
previously on episode six, season two of Anodized
with Clinton Phillips.
So those links will be in the show notes
if you're interested, but I guess I specifically wanted
to tackle this from a different angle, not just DRM,
but also how we value entertainment and utility.
and I guess the drivers behind why DRM exists.
So, okay.
Right, so the problem with DRM,
the definition of it, it's kind of a little bit fuzzy.
I originally, I thought, oh yeah, I know what DRM is.
And the funny thing is that it's sort of,
yeah, it's not as straightforward as you might think.
How would you define DRM, Seth?
you know, in common terms to me, DRM is any kind of technology that's applied to some
form of media that locks it to some kind of platform. You know, that's probably as simple
as I can make it. You can only watch these movies on these devices in this system. You
can only read these books on these e-readers, etc.
Okay, now that's a pretty good definition. Just to rip something off Wikipedia, I mean,
I never do that but I'm going to do it now. It says a class of technologies used by hardware
manufacturers, publishers, copyright holders and individuals with the intent to control
the use of digital content and devices post-sale. It goes on to add first generation DRM software
was intent to control copying, second generation DRM was the intent to control executing, viewing,
copying, printing and/or altering of works or devices.
The problem I guess I've got with all of that is that the name DRM is sometimes not always
used so sometimes people will call it copy protection or copy prevention or copy control
or something like that.
It's a little bit related to software licensing in some regards, depending upon the kind of
software you're talking about.
And I guess the problem is it's a balance between utility and entertainment, because
you can write software for utility and you can write software for entertainment purposes.
So I guess software licensing isn't thought of necessarily as DRM, but at the same time,
it has several things in common.
I guess the other thing we've got to explore a little bit later though is I would hardly
call Excel entertainment, although, well, maybe for some people it is, but yeah, I wouldn't.
Whereas Angry Birds is definitely software that's entertaining.
And Stringer, another example, that's software that is for the purposes of entertainment
in a sense, so for music.
So, you know, it's all, I think that there are some common aspects that's worth talking about.
So, in 1998, everyone goes on about DMCA, the Digital Millennium Copyright Act.
That was passed in the United States to impose criminal penalties, I guess, on those who ever,
who made technologies available, whose intention or primary functionality was to circumvent any
copy protection for content or any of technologies for copy protection.
Things like the encoding on DVDs, Blu-rays and so on and so forth.
Cloning and distribution and so on.
There's a lot of references to DMCA when that was passed, but it is in the United States.
I do not believe that the exact same law in that respect exists in other parts of the
world exactly that way.
So in any case, so with respect to media content and protection, we've got content that's
viewable on a single device or class, I guess you would call it, location, I guess, because
if I've got a Blu-ray, I mean, a single device, I mean, it plays on a Blu-ray, but you can
connect it to any multitude of different televisions or even a projector in your own home.
So I guess that's the problem with, you know, because everyone says, okay, it's on an iPad
or an iPad or an iPhone or an Android tablet or whatever else.
It's like when I say a device or class, that's what I'm talking about.
So like a class of device, I think is a better way of thinking about it than being specific
to a device.
But in some cases it is a single device.
So you're only licensed to watch this on an iPad, that's it.
And an example that I've come across is there's an app in Australia called Foxtel Go which
for the local cable content and you can only watch it on an iPhone or an iPad.
I believe it's locked to those devices.
So if I wanted to watch it on a Mac, I have to run it inside Internet Explorer.
There's no actual option to watch it on a Mac natively.
So I've got to fire up a VM because Internet Explorer doesn't run on a Mac even with that
crossover thing that's supposed to work, it doesn't work, by the way, or wine bottler
also, just not good enough. But anyway, never mind that. So, do you have any equivalent
examples like those in North America?
There's all kinds of DRM in North America. You know, I think the things that consumers
come into contact with most frequently are probably around movies and music, you know,
entertainment media, software, video games, stuff like that.
And certainly, mobile platforms.
That's probably the biggest expansion of DRM
that we've seen in the past few years.
It touches just about everybody.
I don't have anything like--
I don't have a Blu-ray player.
I don't want anything to do with physical media anymore.
So I've moved away from that.
But obviously I buy movies from iTunes.
They can only really be played there.
There's, you know, if you look online, I'm sure you'll find ways to get around
DRM, and I'm sure that's probably something we can touch on later.
I think it for most people here
in this country, it really centers on media.
Certainly there are other you know, there are other examples of that
in in enterprise software and documents and things like that.
But I think that's pretty much how we think of it when we think of it.
Yeah, fair enough.
OK, cool. Well, traditionally, I think people struggle a lot with content
protection on media because some content has evolved
in such a fashion that it was difficult to
copy, duplicate, replicate, whatever, and others,
it's traditionally been heavily shared.
And examples of what I mean is, for example, take a book,
and I touched on this on the e-reader episode, episode 42,
is that, you know, you can read a book and then you can pass it on to your,
you know, significant other, your children,
well, depending on whether or not it's Fifty Shades of Grey,
or, you know, your next-door neighbor, bloke down the street,
whatever you like, you know, whoever you like, it's shareable.
There's no way you can stop and tether that book to your wrist,
at least not in some kind of painful way, I guess.
But, you know, it's traditionally, it's a highly shareable form of content.
Same with magazines, I suppose, newspapers as well.
Whether or not people did that regularly or not is, you know, I think that
there's been a move away from that
so that people tend to be more of it's more of a disposable culture.
So we'll we'll buy a book, read a book, and then we'll either throw it away
or keep it in a bookshelf, never read it again.
But but sharing seems to be less of a thing.
And certainly secondhand books seems to be less of a thing.
But books is one avenue, whereas the other avenue, movies, for example,
movies have traditionally not been easy to clone or copy,
having to go to a movie theater to watch them.
And, yeah, that is in of itself a form of, well,
it's not a form of DRM exactly, but it's definitely a form of restricted viewing
because you can only watch it if you've got a projector
and you've got a screen big enough and a sound system and everything.
That's all locked by location.
As we've evolved, we've developed VHS or Betamax recorders, we could record television.
But that's it. There's never been a way to actually clone a movie unless it was on television first.
So I think that a lot of people that grew up with the ability to record movies on television will
look at the DRM that's now come in for Blu-rays and DVDs and start to question, well, okay, I used
used to be able to record this, so I can record this off the TV now.
Why would I pay money to get a copy of this when I could get it for free off the TV?
There's a convenience and there's a quality aspect.
But now I'm being restricted from making a copy for my own purposes.
Why is that the case?
So two different paths, two different sets of expectations, I think.
Yeah, definitely.
You know, to your point about sharing stuff, I think there's something inherently
human in experiencing some kind of media, entertainment,
et cetera, just to use books as an example,
and wanting, you know, if you enjoy that experience,
wanting to share it with somebody else,
tell them about it, you know,
and the idea of loaning a book to somebody
is I think really core to the way
that we kind of share experiences with people,
where we've had some kind of transformative thought
or something in regards to that media.
And we want this other person to have the same thought
or their own thoughts so we can talk about it.
And DRM has, for the most part, kind of stifled that.
There's, you know, you can tell somebody,
hey, here's, you know, we rented this fantastic movie
or we bought this fantastic movie on iTunes.
And it's really, really great.
It's maybe one of the best things I've ever seen.
We watched it three times over the weekend
and here's the name of it.
and you can't do anything past that,
aside from inviting your friend over for a viewing.
But there are, you know, I know that Amazon has worked out
a way where you can like lend Kindle books to people
for a period of time, you know.
You can give somebody certain Kindle books
that have been, I guess, flagged for sharing
for, I guess, it's a two week period or something like that.
So there are steps that some companies have taken
to kind of bring that experience back.
But even still, it's limiting.
There's a time limit on it,
and if you don't read the book in two weeks, it's gone.
You can't read it anymore,
which, again, is not how reality works.
You could loan somebody a book for 10 years
and get it back eventually.
You know, it's strange how--
- That's assuming you get it back eventually.
- Right, it's strange how we're trying to re-approximate
those innate human desires to share
experiences, but there's still these asterisks imposed on them.
Yeah, exactly. Yeah, it is an interesting point.
There are book clubs where everyone will read the same book, and sometimes in book
clubs, someone can read a book and then pass it on to the next person and so on.
And you don't have to all go and buy a copy of the book in
order to be part of a book club.
And it's that sort of level.
It's a barrier of entry, I think, to those sorts of group discussions.
It's sort of it's made it more difficult.
And I absolutely agree.
And it's one of those things that, you know, as we become
more individual and it's almost like the
technology and the- From a business perspective, they're not-
They don't see the value.
They see more value in an individual or a group,
a whole bunch of people that individually buy, purchase a book,
and then they have their own individual experience with that book, let's say.
They're not interested in,
"We're going to let you loan this out to whoever you like for the interest of
spreading the word about this book," because we don't see value in that.
All we see is value in each of you individually handing over your money and
that's it. And previously there was no way to really do that because once you sold the
book then it's out of your control. No longer can the publishers actually enforce anything.
It becomes up to the individual how they want to handle that. Whereas with DRM the mechanism
exists. It is actually possible to do some degree of enforcement of what happens with
that content. You still can't stop someone from lending their Kindle to someone else
I suppose, but there's also a level of trust in doing that because if you do do that, then
that person has the access to everything on your Kindle, not just that book.
As I sort of suggested in episode 42, maybe there'll come a time when it's so cheap that
people will just hand around their Kindles because they become a commodity item in a
sense.
Yeah, I'll give you my Kindle, you read all my books and vice versa.
Yeah, exactly.
I mean, why not, right?
the future extension of the way book lending used to work in the past.
So I can see that happening at some point.
I don't think we're there yet. I think people are far too clingy.
Is that the right word? With their technology?
You know, it's mine. That's my Kindle.
I can't have my Kindle. It's mine.
OK, so with respect to movies
and so on, I don't actually have a DVD collection either.
I also don't have a Blu-ray player and I've gone to all digital on everything.
And I'm trying to think of the number of movies I've bought on iTunes.
I think I've bought one and I've picked up a couple along the way as
part of Christmas promotions.
And like, I think I've got Home Alone on a Christmas promotion, you know,
the iTunes 12 apps of Christmas or whatever it's called.
I think that's what it's called. Yeah. So, you know, that's it.
And the reason is that most of the movies that I watch,
I already had on DVD previously.
And I just ripped them, hand-break them
and put them on iTunes.
And I just don't watch a lot of movies.
So I do kind of, we are just getting Netflix in Australia,
but unfortunately, I mean, we could have gotten via,
a VPN to a United States IP address,
and we could have gotten,
they accepted Australian credit cards
and all that other good stuff.
But, you know, my bandwidth here is terrible.
So for me, it's download only streaming.
It's not really an option as the quality
of the Skype conversation.
And we commented on before
is an attest to my bandwidth issues.
But the truth is that, you know, it's frustrating.
But anyway, the truth is that streaming libraries
and iTunes have their place,
but if you ever choose to leave,
you can't take your content with you.
And if you wanna play it somewhere else, you can't.
So if you've got DRM applied to your iTunes purchases,
you can't actually play them elsewhere.
I mean, can you take an iTunes purchased movie
out of iTunes and play it in different software?
I'm gonna have to feign ignorance.
I'm not actually sure, I haven't tried that.
- I would say there's probably a way to do everything.
The question is how much of a pain in the neck is it?
- Sure.
Well, I know that iTunes used to have DRM on their music
and then they famously took it all off
and offered up high bit rate quality versions
when iTunes match came out,
sort of a kind of like a music amnesty,
I guess would you call it that?
- Yeah, it was a big deal, I remember.
And that's something that the music industry
pushed back against for a very long time.
But I think it was a really great move
because that kind of stuff,
I mean, music is one of those things that just kind of,
without trying to sound like a hippie,
it's just like around you,
like your music is just with you, you know?
And any roadblocks that you drop into place
to prevent people from having
a reasonably streamlined experience
with their own music collection is crazy.
So that was a big deal
when they actually were able to do that.
- Yeah, absolutely.
And I was also, I think Amazon's music as well is also DRM free.
I think has Amazon's been DRM free from the beginning?
I'm trying to remember because I launched their music service after well,
after iTunes.
I want to say that it was, I think that was kind of one of their,
one of their tent poles when they did launch that service. I could be wrong,
but I feel like it was.
Yeah. I seem to recall that it was. And that was, as you say,
that was one of their tent poles. I'm pretty sure it was one of their big features.
So absolutely right.
And honestly, I think that that was one of the things that
inevitably, you know, iTunes, I don't think,
a part of me wants to think that.
Apple pushed for that because they thought it was the right thing to do,
but a part of me thinks that there was enough market pressure beyond
beyond iTunes such that they,
I know that they were losing certain people across to Amazon for the reason that
it was DRM free. And I do wonder how much of it was,
was driven by the, by market, market pressures from outside there,
from outside.
I think that was, yeah, I think the timing of it may have been more, uh,
to do with the market pressure,
but I feel like that's something that I had heard about for a long time prior to
that. I feel like that was something that Steve Jobs campaigned for,
for a very long time and whenever they finally got it done may have been due to the fact
that it needed to be done then as opposed to they wanted it to be done then or sooner.
But I feel like that was a thing that they championed all along the way.
Yeah. No, that's fair enough. That's right. I do recall him mentioning it in the past,
but then perhaps that was one of the final straws for them. Either way, good end result.
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Okay, one of the other things that I wanted to talk about before we get on to the software
angle of this.
I think it comes down to, I guess I don't really want to go into too much depth about
the technical mechanisms and the reason is that, you know, I guess I don't find that
as interesting as you might think because the actual practical method by which, you
know, we enforce DRM. To me, it's far more interesting to
think about why businesses feel the need to do it and whether or
not it's actually impacting their business by not having it.
So I guess to start to look at it that way, I think we need to
start looking at it from we'll start from the consumer angle,
and then we'll consider the business angle. So I think that
from the consumers. Yep, cool. So from the consumer angle,
I don't like to label people groups so let's just call them generic titles
type A, type B, type C. In no order of precedence, preference, priority or
anything. So yes no judgment. Anyway, a type A person says and I don't mean a type A
personality either just in case that's what people are thinking. So I'm doing
air quotes here. So picture air quoting John air quoting you. I should be allowed to copy whatever
I want whenever I want it however I want to. That's the type A consumer angle. I think it's
fair to say type B's let's say would say I would like to pay a fair price to use or watch what I
I want and like before where I want how I want. Now type C these are very special
people I will pay any price maybe even multiple times to use or watch whatever
I want whenever I want and so on. Now the reason that I want to sort of broaden
break that down to three categories is to highlight something that I think is
interesting. I think the type C group is incredibly small.
But when I say small, I mean in terms of volume of
transactions. So if you consider that any one person could exhibit any
of those behaviours at any time based on the kind of content we're talking about,
you may say, say you're a big fan of the Beatles and maybe you've just bought
all the Beatles albums on vinyl for some, God,
unknown reason, because you like lower quality audio and they look cool,
apparently. Anyway, this is when you tell me you love vinyl, isn't it, Seth?
No, I mean, I have a spot in my heart for vinyl and I have quite a bit of it that
I've collected over the years, but I much prefer the ease of digital music.
OK, that's the spirit. So...
Casey's going to be upset.
Who the hell is Casey? No, we're past that joke now.
Okay, anyhow, quite possibly.
Yeah, vinyl is just...
Vinyl is vinyl.
Anyway, so I guess my point is that when the Beatles then released their albums
were all released on iTunes, it's like, "Oh, got to buy all them now."
Because they're now on iTunes format.
They're all, you know, however many kilobits per second and they've been remastered
digitally again, more digitally than the last digitally time they were digitally
digitally done, whatever.
The point is that I'm going to buy them again because I love them so much.
And I'm not saying I love the Beatles that much, but I'm saying that someone may feel that way.
And if that's the case, then you would fall into that type C.
So I'm happy to pay whatever price.
And I'll even pay for the same content multiple times in different formats, perhaps, you know, because I really, really love that content.
But let's be honest, most people do not feel that way about the vast majority of music that they listen to or movies that they watch.
Because, I mean, well, you can't just love everything.
Well, maybe you could.
I wonder what that'd be like.
That'd be strange.
But anyway, people just don't love everything like that.
We have things that we really, really do like.
And that's it.
So I think from a transactional point of view, that quantity of transactions is very, very small.
I think that's reasonable.
Cool.
So, the next argument I think is the other end of the spectrum and that is the hippie
argument.
You said the word hippie so I'm going to steal that from you.
The hippie argument.
Free love baby.
So I should be allowed to copy whatever I want, whenever I want, however I want to and
you can't charge me because that's giving money to the man, whatever that is supposed
to mean.
So, you know, and obviously there's going to be an element of that no matter where.
I think everyone exhibits an element of that sometimes for some level of content.
You know, whether it's recording songs off the radio, I guess.
Do people still do that?
I guess they might. I mean, I did when I was a kid and I had- Well, I had no money when I was a kid,
so, you know, I'm going to get out my cassette.
No, I- Hey.
No, everybody did that, I did that.
I was just laughing, just thinking about somebody doing it now.
Yeah, I know. I wonder if anyone still does that.
I was like, yeah, but because we think about though, I guess we do listen to podcasts and
you know, I'm using audio hijack for recording this, this podcast and you can set up to do
time recordings.
There's no reason why you can't record audio from any application you want on your Mac
and you could stream radio stations listening to, you know, smooth jazz mixes or whatever
you'd like to listen to.
And there's no reason why you couldn't do that.
And many of those radio stations are free while quite and quite free.
still paying for the bandwidth, but you know what I mean? So, I guess you could do the
modern equivalent, but yeah, I just remember getting the cassette deck out and recording
the radio, recording my favourite songs and doing a mix tape.
Yeah.
Oh, how old are we?
I think probably the modern equivalent is kids watching music videos and doing stuff
on YouTube and then using, there seems to be a proliferation of
YouTube downloader apps in the app store.
So, I wonder if that's why people are doing that,
but just with their phone or something.
I think you're onto something there because my oldest two kids do exactly what you
described and they'll create little playlists.
And I'm not sure if they've got to the point of sharing their playlists, but certainly
that would make sense at some stage.
So yeah, that's an interesting point.
So yeah, 'cause YouTube of course is, you know,
again, it's free, it's free, it's free.
And music videos, I don't know.
I have this thing with music videos.
I kind of like them,
but I'm more about the music and the bass, so I don't care.
Anyway, all right.
But other people love music videos and that's great.
Geez, I spend a lot of money on music videos.
Why do they spend so much on music videos, Seth?
I can't see them generally.
I'm listening to the music.
Like I said, it's all about the bass, but anyhow.
All right.
I'm not sure really I had a point there.
Music videos are music videos.
Okay, so got to get to type B and I think type B is to be
honest, actually a reasonably decent slice of the population
and I think that cognitively we understand that everything
comes at a price.
It's just how much are we prepared to pay.
and just to revisit what type B was,
is the concept that I would pay a fair price
to use and to watch whatever I want.
So the problem isn't the concept,
the problem is how we each define what is fair.
And that's where the disconnects happen
and the arguments begin
and you start having a virtual bar brawl
and all that sort of thing.
Because what I consider fair and what you consider fair,
pretty well guaranteed to be very different.
It's kind of like pizza toppings. No two people ever agree.
So, I mean, with a song, iTunes famously priced a song that was 99 cents originally, if I remember correctly.
Yep.
Yeah. And some people said that that was too much.
Some people said that was, you know, that was actually really cheap because the rest of the album stunk anyway.
So, just give me one song that I like.
And that's changed the face of how albums have been made, I think, to a greater extent in the last decade.
But the truth is that agreeing on what is a fair price is the sticking point for a lot of this stuff.
So if we assume that we can ignore the type C transactions because they are relatively rare.
And if we consider that the people that are the hippies in the audience are also statistically speaking, relatively rare.
I think most people fit into the type B, which is I'm happy to pay a fair price, but the arguments are always over what constitutes a fair price.
and not everyone will be ever, no one will ever be happy
with whatever price is set
'cause someone is guaranteed to say, oh, that's too much.
No matter what that price is, even one cent.
It's like, couldn't they round it down to zero?
Someone would say that.
- Yeah, it's true.
- Okay, so that's the consumer angle.
Now, the rather obvious, is it obvious?
I guess it is.
We'll find out, business angle.
So let's just, as I said, state the obvious,
which is entertainment or in the case of software,
if it's time-saving software or entertainment software.
These things, they take time and time and people power.
Therefore they take money to create.
Time is money, there you go.
Unless of course people like to work for free,
but generally, you know, they don't.
So money is required upfront to invest in a project.
Doesn't matter what it is.
You need to invest time in order to create music.
You have to compose it. You have to record it.
It has to be distributed.
Some of those things have gotten easier.
But irrespective, you need something upfront.
And that sort of upfront investment, you know, means that in order to break even,
meaning that you get back, you know, whatever you put in plus any expenses.
You know, if there's no break even amount as a result of whatever it is you've
created, then you cannot have a sustainable business.
So if you're doing something purely altruistically, you have no interest
in making any money, you have alternative revenue streams to sustain your existence or
your existence is sustained on the graciousness of
others or whatever, then that's different.
I'm talking about people that actually want to create content
as a business.
So, and, you know, people think about musicians and independent musicians and so on.
Okay. They're a business.
You know, they're out there.
They're not out there to make music just for you to smile and say, that's a really good
song. You know, they're interested in making money from it.
So, you know, it is a business and, you know, you can go to a recording company and get a
contract with them and all that other rubbish.
And, you know, that's it's still it's a business, you know.
So that's really what I'm talking about.
So breaking even matters and making a profit matters even more
because I mean, otherwise most people wouldn't bother.
I say, "Oh, I already broke even."
So the concept from a business angle, if you simplify it
greatly, every stolen or copied widget, whatever I create,
music, song, movie, software, everything that's stolen or
copied is lost revenue, simplistically speaking.
Now, obviously, that excludes the whole word of mouth
promotion idea.
And the idea of giving away free samples is as old as time,
wherever you're selling.
Well, maybe not that old, but certainly as old as people have been selling things.
So giving away free samples, you know, stimulates the whole idea of word of mouth.
So, "Oh, this thing was free.
I tried it out. It was really good. You should give it a shot." They go along and they say, "Oh, sorry, we
gave away free samples, but it's only $1." "Okay, cool.
Well, I'll get that for a dollar.
I'll buy that for a dollar." What movie was that out of?
I think it's out of Robocop, I think.
wasn't it? Yeah, Robocop.
Yeah, that's it.
The original and the best.
With the Ed- Ed 209, totally reliable robots.
Anyway. It's a good movie.
Anyway, have you seen the newest- the most
recent one, they've redone it?
I actually haven't.
It's been in my queue for a while.
I'll get around to it at some point, but the original is one of my all-time
favorites. Yeah, it's an awesome movie. I watched that many times.
Yeah, anyway, no, I'm the same. I've got it on my to watch list, but I haven't watched it. Maybe it was the DRM.
Anyway, okay, so, so free samples, and, and so on. So the simplistic way is, well, if I find a method by which I can
lock down and ensure that every single copy is paid for, then I should, in theory, generate more revenue.
in theory. So the debate I think circles around the choice by the content owner or creator choosing
to give it away for free on their terms versus whether or not the end customer chooses to do it
on on the customer's terms when they would choose to do it. So let's assume that you've only got a
small percentage of the population that it knows enough to circumvent DRM or to
obtain copies that do not have DRM on it of the content in question. Well you have
to assume that's the vast minority of people. Services like Napster for example
made it easy for a lot of people. You download the software, search the song,
download, you got it. You know but doing torrents and stuff and and you know for
a while there was LimeWire and all that and there's different, different
mechanisms, you know, they're not for people that are not for
the faint of heart, I guess, for the one of a better way of
saying it, of finding it's not easy for the average person to
use. So a lot of that is, is you're getting DRM, you're not
having DRM circumvented through the obscurity of how to get
around it. So ultimately, though, I think that from from a
business point of view, it's more about they want control of
giving away the free samples and saying, you know what, we're going to have a promotion.
You have free samples for this long and that's it.
Whereas, you know, if you hand that over to the general populace, then you have no
control. So a lot of it just comes back to that control over the flow of sales.
But anyway. Okay.
And then, of course, comes down to the debate around what price is fair and and this
is one of the ones that honestly, I don't know what to think, because
You look at all the overheads that recording studios and running a record label has.
And there's the promotional aspect, there's people that organize the tours, there's
all these different people with their hands out, middlemen, middle people,
whatever, multiple levels of middle people in order to just get the band up on stage to
perform a song at a venue.
You know, for example, or setting up the recording studio and then they've got people to do the
mixing and the editing and the...
Oh dear me. You know there just seems to be so much to do and all of that cost.
And it's hard for the general populace to say, for me to say,
even a little bit of knowledge being dangerous, knowing the little bit that I do about how
audio is put together for an album.
You know, how can I judge if $20 for an album
is actually a rip off or not. I have no way to gauge that.
I think as a regular consumer with no knowledge of the industry and the production and all that stuff,
it is hard to understand the breadth of work required to produce a recorded album of songs.
And I'm sure if you really examine that process,
you could find a way to trim a lot of fat from it,
as the rise of independent musicians selling their own stuff online
can attest to.
But it's also the price that the market will bear, right?
It's not so much, is it fair or not?
But there's a certain point at which people will say,
I'm not going to spend $15 on this album.
I'll spend $10 on this album and the industry has to be prepared
to make the money that they want up somewhere else.
If $10 is what people are willing to pay for an album of songs
and they want $15, they're going to have to find that $5 somewhere else.
Yeah, you're absolutely right.
But I guess my frustration is the price that the market will bear.
It's true. It's absolutely true.
But, jeez, I hate that because it's what
The price the market can bear is about how much spare money is available in the market
and how desirable something is.
And those are two very intangible things.
It may well have been the case 10 years ago that $30 for a CD was acceptable.
But now, if you get 12 songs on an album and they're available for 99 cents each or something
like that, well, geez, you know, suddenly the cost of creating the music, I guarantee
you has gone up, not down for the most part, especially for a professional studio recorded
album because, you know, salaries have gone up, rent goes up, the electricity's gone up,
everything goes up, which means that it's going to be more expensive in terms of raw
dollars to make it and yet the prices have gone down.
And you know, obviously, therefore, the price the market can bear has dropped.
Does that mean that it's no longer worth it?
Or does it mean that that's one of the reasons why record companies are not doing so well
is because they can't, the market cannot support what was previously a much higher margin business.
And now the market can no longer bear those prices.
Yeah, I think it's all of those things, right?
I think anybody who's worked in the music industry can point to a million ways in which
path that you take to create an album is filled with bloated excess.
There's a million different ways where money gets handed off
to people who barely have a role in bringing that album to life.
And that's just how the business works.
There's just-- like you said earlier, there's a million people
with their hands in the pot.
So if the music industry is not doing well because their entire business
model is predicated on paying a lot of people who have very little to do with
the actual production of the media, that's the music industry's problem
to solve. That's not the consumer's problem to solve. And if the consumer
decides, "I'm not getting value for the $10 or the $15 that I'm spending," they're
gonna take that money and buy something else with it. And again, that's not... I
mean, in no uncertain terms, that is the music industry's problem to
solve. But, you know, if they're going to stick to a business model and a method of
production that is, by most accounts, antiquated and expect consistently positive results in
a completely, completely different and ever-changing market, you know, that's, that's, you can't
point to consumers and go, "You guys did this. You know, you, you did this to us." You, you
have to adapt.
Like adaptation is critical to anything that grows
and evolves, whether biological or otherwise.
And you know, there's been a lot of ink spilled
over this already, so I'll stop.
But it's one of those things where
when I start thinking about it,
it just seems so silly that they get so indignant about it.
Like, oh, consumers, you know, you're killing us with,
YouTube's killing us because people would rather,
people would rather watch this for free once or twice than buy it.
And it's like, well, that's fine then.
Like, that's the way it goes.
Think of another way to make money.
That's how any business works.
Your business stops working, you need to think of another way to make money.
Yeah, exactly right.
And I'll come back just quickly circling back to the music videos and how much money
goes into making a music video.
I say, oh, you've got to have a music video.
Really?
Well, prior to about, I think the late 70s or early 80s,
something like that,
most music didn't come with a music video, you know?
So I don't know, thank Countdown,
thank, I don't know, MTV, whoever,
for popularizing it and then making that an excess
that you then require.
The vast majority of music that's listened to
is listened to without a video clip.
And let's be honest, most video clips are, you know,
music videos are confusing and have very little to do with the song and
get off my lawn and all that stuff. Anyway.
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The next stop on this, the DRM and the value of things, of media train, I guess, is a couple
of ideas regarding the market value, which is, I guess, comes back to, I want to start
with the word abundance. And what I mean by that is, I guess it's a matter of accessibility.
It seems to me that there was a time, you go back to when television first came out,
you had no option prior to that, that if you wanted to see a movie, you had to go to the
theatre. And before there were movies, you wanted to go out to see some kind of audio
visual entertainment for the want of a better way of saying it. You'd have to go to a quote
unquote theatre where you would watch a play, you know, a la Broadway and so on and so forth.
Now that entertainment medium still exists. It's not huge, but it still exists. So movie
theatres come along and so on and you know, they still exist too. They're getting very
expensive, still less expensive generally than going to the theatre.
But they're balancing out to a price that that segment of the market will bear for people that
want to go and have the big screen experience. And certain movies certainly they are better in
a big screen experience, just like certain movies are actually better acted as a play
rather than as a movie. So again, it becomes a little bit more of a specialised niche as it were.
but the mass market follows the cost and the abundance angle.
And what I mean by that is TV started out being very rare,
very expensive, cost comes down and then they become very abundant
and screens are now everywhere.
Think about screens on your phone, on your computer monitor, your laptop screen.
You know, it's all digital now.
So it makes, well, practically all, which means that there's no limit
technologically speaking, to what you can display on whatever you might have in front of your face,
including a television set. So there is no more barrier to that. And for music, anything that can
show a picture generally has audio that goes with it, unless it's one of those silent movies that
I've heard about and someone's playing a piano as you're riding on the train to work in the
the background. So you can, you know, anyway, so, you know, the truth is that, you know,
these, with all of the abundance of devices that can play audio and you can watch video
on, that means that there's a lot of content, the opportunities to watch content, and that
drives the creation of more content for people to consume. And that drives down inevitably
the price. So the days of making lots of money off of movies, off of music, those days are
rapidly diminishing because the problem is that it's so abundant that the average price
is being driven down so that the amount of profits you make will be less. I mean, there
will always be blockbusters, there will always be big albums that make it big, there'll be
books like Harry Potter and so on where individuals do make lots and lots of money.
But the days when the average person could make a lot of money by making it, I think
it's getting harder and harder to make those sorts of values unless you are truly very,
very lucky or very, very talented.
And maybe that's okay, but anyway.
So value, abundance drives price down.
value, I think perceived value is important as well.
But the converse is true, I think as well.
So I agree.
Well said. OK, cool.
Fair enough. Well, that was easy. There you go.
But there's another angle to consider.
What about passion, desire and, you know,
I'll use the word lust, because honestly, from a music
technological point of view, there is no question.
I know a lot of people in the audience listening to this episode have a
certain passion, desire and lust for technology.
So, you know, we're drawn to the newest gadget,
let's say. And sometimes, you know, it's the same thing with content.
So we're automatically drawn, let's say some people are fans of a certain artist
like U2 or I don't know, I always pick on U2, but,
and I know there's people that don't like U2, that's okay.
But you know, the Beatles, were they still together?
Maybe that's a bad example.
Current musicians, Coldplay, Robbie Williams, oh dear.
Anyway, my point is people are making music all the time.
Fans of that stuff will want to listen to that stuff.
people have a passion for listening to their new content and that drives the
perceived value up higher. So the more passion, the more desire and lust you
have, despite the fact that whatever you're peddling, whatever it is, what
entertainment it is, is of approximately the same average value because of the
abundance of other people's content. That passion, desire and lust, that drives up
your perceived value and you can get away with charging more and that's okay
because less people will buy it but the people that do are
willing to pay a lot more and if you want an example then all you need to do
is look at Apple and look at what Apple sells and I know they don't sell content
exactly. Apple don't make TV movies, TV shows, movies, or music.
They don't, at least not yet, at least that we don't know about yet. So I don't
Rumors are rumors, who knows? Anyway, was that me starting a rumor? Perhaps.
Anyhow, I have no inside knowledge.
But anyhow, so yeah, no, the Apple channel.
Anyway, so yeah, anyway, so I honestly think that Apple is sitting in a, is positioned and has positioned itself as being a desirable, some say fashionable, I guess.
Yes, people are passionate about it.
Despite the fact that computers and MP3 players
are abundant and were abundant when Apple were around,
their brand has reached a point where people's desire
for it has pushed up its perceived value.
Despite the fact that a Windows laptop can do most anything
a Mac laptop can do, whether or not it has more
or less problems, well, that's open for discussion.
but the truth is I can still edit an Excel spreadsheet
in either and it will still work.
So anyway, maybe that's going too far off of topic, but.
- Well, I mean, just to, yeah,
just to kind of emphasize your point about Apple,
I think the analogy that you were trying to create
is that in that case, Apple is creating an experience
the way those other artists are creating an experience.
And while the hardware itself
may retain more long-term value,
both to the user and in the market,
people are willing to pay more for these devices
and entrance into the Apple ecosystem
because they want to have that experience
the way that somebody will pay more for a movie
or an album or something,
because they want to have that experience with that artist.
- Yeah, absolutely right.
And I think it's one of those things that
People, I think there's a lot of,
I hear indignation, you know,
about things they cost too much.
And, you know, it's like,
I know there's been a lot of ribbing and joking
and about the price of the gold Apple watches, for example.
And it's like, well,
it's about the price the market will bear.
But, you know, the truth is that
there will always be people that are prepared to pay that.
They don't have to sell a lot of them.
This is getting off topic.
I don't want to talk about the Apple Watch, but anyway.
So passion for a product, a passion for media
will definitely drive up its value.
There's no question.
But the funny thing is, can you sit in the place?
Can you create content in an area there
where there is abundance and still have people
that are passionate about it, that are happy to pay more?
And I think the answer is definitely yes,
but it's about finding that niche and that's difficult.
How much has this got to do with DRM?
Well, I guess the reason is that I want to think about
where is DRM primarily pushed in consumer areas?
And I'm gonna put forward a suggestion
that DRM is pushed most heavily,
traditionally it has been pushed most heavily
in consumer areas of abundance
with low levels of passion, desire, or lust for the content.
So examples are of course, DVDs, Blu-rays, movies,
and the vast majority of music.
Is that all the kinds of content that are out there?
I guess not, but how much DRM is there in podcasts?
Actually, not a heck of a lot.
I mean, that's, you're talking about subscription,
RSS subscription feeds.
Oh God, sorry, help me out, Seth.
What's it called again?
- I don't know what you're going for.
What did we?
- You know how you can subscribe,
you can have a authenticated feeds.
There you go.
Sorry, that's what I was trying to get at, sorry.
- Okay, okay.
- So that's pretty rare, I think, in podcast land.
And people, I don't know, I guess maybe this is the hippies,
hippies talking, saying, "We don't want that.
That's, you know, that's get off our hippie lawn.
Anyway, so I don't know.
I don't know, what do you think?
I think that DRM is pushed in the areas
where there is abundance and therefore you're trying
to extract the maximum amount of value out of the low,
although you get high volume,
but the market can't bear much of that,
much of the higher cost.
And therefore you tend to lock that out DRM.
What do you think?
Well, I don't know.
Maybe I'm not sold myself on that idea.
- I think there's something to that.
I think that DRM probably makes more sense
in a market that has, let's say,
a lot of saturation points.
So mainstream media, you know,
pop culture, movies, and music, and things like that.
That's, you know, to your point,
I think that's where DRM makes the most sense for companies
because even though it's an inconvenience
to customers in some capacity,
there's the volume of people willing to pay
for that content is so much bigger
and the companies are willing to, I guess,
quote unquote, take the hit if it even is for them
that they will incur because there's more people
to just make up, you know,
the people that won't buy it for that reason.
And I think with stuff like podcasts or independent music
or independent movies where things are distributed
through different channels, it doesn't make sense.
It doesn't make sense to try to get in front of that
because the potential for alienating the people that
are buying it, I think, is a lot higher.
And so I think it's just a game of numbers for them.
But then you look at stuff like what
Louis C.K. is doing, where he's a very well-known comedian.
and he's releasing mainstream comedy content himself,
and it's very cheap, and there's no DRM,
and you can do whatever you want with it,
and he's been extremely successful with it.
And I'm wondering if there will ever come a point
where the larger industry as a whole
looks to examples like that and says,
"Maybe we should rethink this,
'cause people really seem to like this,
and maybe there's more money to be made
doing it this way than doing it the other way. I don't think that's going to happen anytime soon,
but I think as we start to see more examples of larger, more mainstream content providers and
artists taking that road for themselves, I think it definitely can trigger that conversation more
readily. - Absolutely. I think I want to come back to that in just a second, but just before we do,
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So you brought up my closing point.
So we may as well get to that then I think.
And that is,
can we ever really truly get away from DRM?
I have concerns and I guess my concern is that wherever there is someone creating content for a business
there's always going to be someone out there who is either naive enough, inexperienced enough
They just want to try it on and say the simplistic viewpoint is that if I lock it down and force
people to pay, then every purchase I get is a guaranteed amount of income.
Therefore, that is the better answer.
Whilst they ignore the fact that people are perfectly happy and would prefer to get things
for free with a minimal amount of advertising or would be able to like to pay for it once
and then be able to free to replicate it, copy it as many times as they like because
they feel a degree of ownership.
It's like I buy a hammer, I can use a hammer on whatever nail I choose, not just the nail
that you tell me I'm allowed to use it on.
And if I want to use it on the second or third nail, that's extra.
So I don't know, I just get this sinking feeling.
I know you're saying that you think it could happen someday.
I'm not convinced.
I think there'll always be someone somewhere selling something that is going
to be locked down by DRM. I honestly, I think it's inevitable.
I think people are going to just say,
like businesses are simply going to look at it simplistically and it's just going
to be one of those lessons that people never learn. Like, I mean, business.
I think the reasons and the rationale for businesses using DRM
now in the consumer space,
at least, are different than the place where they started.
So we talked about this earlier.
It was more about copying and redistribution and sharing
and things like that.
And now, at least looking at the consumer space,
the consumer electronic space, I think
it's really more about platform lock-in
and not so much copying content around and sharing it.
I think it's more about I have all these movies and all
this music, and it only really works
with my iPhone and my Apple TV and my iPad and my Mac.
And I have all of this Amazon stuff and it works with my Kindle Fire
and my Fire Phone and, you know, whatever, whatever else,
whatever other devices are part of that platform.
I think it's more about
creating this umbrella experience between devices and software that,
quite honestly, Apple has been doing for a really long time.
And I think other companies are looking at it and going,
you know what, that strategy makes a whole lot of sense.
And, you know, it used to be everybody gave Apple a lot of crap about,
you know, the platform lock in.
But everybody's doing it now. It's not just Apple.
That is the predominant business strategy for consumer electronics is get them in,
have them buy all these satellite devices, use our content.
And that's it. You're like, you're here now.
And you can go and do something else if you want.
And certainly, like, you know, there's ways to listen to this content
or view this content in other places.
But it's again, it's not easy to do.
Most normal people aren't going to do it.
And most normal people aren't going to say, you know what?
I really I'm going to switch my entire,
you know, entertainment platform from Apple to Google Nexus devices
and Google, you know, TV or whatever that, you know, the equivalent products are, most
people aren't going to do that.
So, I think the notion of DRM now is not so much about distribution and copying.
It's more about once you're here, you're here and these things only work with these things
and you just keep going in that direction.
Yeah, it's more about increasing friction to leave.
Well, that's the concept of, I guess, of platform lock-in is to provide a path
of less resistance to stay within the platform and a path of greater resistance
to leave the platform to jump to either in part or in whole to a different platform.
And the relative levels of friction
in those cases are, I guess,
it prevents-- And it's funny, you know,
I was just thinking about this, Apple's strategy has been apparent for quite some time
and people still attribute so many things that Apple does as being,
"Oh, yeah, Apple is doing this for the good of everybody or the good of the..."
You know, it's like this.
I do wonder whether or not that that trope whereby Apple is doing the best thing for everybody,
whether or not people are starting to wake up and realize that, you know, it's like you say,
platform lock-in is a viable strategy and it's worked well for them. Steve Jobs was even,
it was even quoted, I think it was in the biography, in the most, in Walter Isaacson's
biography as saying in that way, the quote was, "In that way, we can increase their lock-in to
our devices." And it's like, well, he wasn't saying that, that's businessman Steve Jobs
talking. And, you know, although I don't, I don't recall if he
actually ever said that publicly, but you know, it's so
DRM in that case, if you put DRM on top of platform locking,
you've essentially put DRM on top of a form of DRM. And maybe
that's why they had less issue letting it go.
Yeah, it's, it's interesting to note, though, that for the
longest time, a lot of the companies that make hardware
now we're only making software and content before.
And Apple was a hardware company that made hardware and software. Right.
So like their strategy has been apparent for a while.
You have the hardware, you view the content on it.
But Google was a search engine.
And now, you know, they acquired Motorola and I guess they let Motorola go.
Right. I think Motorola is not part of Google anymore.
Am I remembering that correctly?
Honestly, I actually don't know.
Either way, Google, you know, was not a hardware company, and now they have
Nexus Hardware and Entertainment Hardware.
Amazon is a storefront that has their own hardware for their own content.
So, you know, it's these are companies that
arguably are, you know, better, worse, other
when it comes to making these hardware experiences, but they have realized that
this is a good play, that, you know, Apple was not stupid to do this.
They were not trying to do, you know, something so secretive.
It was always out in the open that this was how this worked.
And I think a lot of other companies are coming around to it.
You could probably point to a million other examples, not just, you know,
the couple that I've rattled off, where there are companies that have decided
to make their own devices solely for the purpose of keeping people using the product that they
were known for using.
Yeah, no, it's a good point.
And now that Google and Amazon have, I don't like to say copied, but certainly chosen certain
aspects of Apple's strategy and are doing that as well, that some of the need to have
DRM is perhaps reduced.
But by and large, I don't think the DRM
will ever completely die.
I think it'll be one of those things
kind of like the theater and the movie theater.
I think it's always going to be that element
and there'll always be something
that is locked down in some way.
Perhaps DRM as it stands will only become something
for those companies that don't have a platform lock-in
so as a method of locking in without having a platform.
Maybe that's what will happen.
But I would love to believe in a utopian future
where there was no DRM, but I just can't see it happening.
It's unfortunate, but irrespective,
I'm not sure what we can do to change that, I guess.
Ultimately, the market will decide
whether people are prepared to pay for something,
and that comes back to the passion, the lust,
and the desire for the content that's being created.
And so long as there is some of that,
I think there'll always be people that are greedy
and that wanna have DRM applied
if they don't have their own platform.
So, it's hard to value entertainment,
but just quickly before we wrap on this topic,
I talked a little bit before about software.
And one of the things that's been interesting to watch
is the move from software lock-in
and then connecting up software to web services.
and having an ongoing subscription type of thing.
Because I think it's generally agreed
that platform lock-in for music,
like streaming audio services, is very much a form of DRM,
whether or not that you call it that specifically or not.
I think that there's very little question
that Pandora and, what's the other one?
Spotify.
you could argue that they are forms of DRM, you know, from the platform point of view, you stop
paying your subscription, all of that music is gone.
You don't have it anymore. And, you know, that's that's an issue.
I said Pandora, I didn't mean Pandora, did I?
Well, it's late.
I meant Spotify.
Anyway, so what am I getting at?
What am I getting at? So software is now going down a similar path, perhaps, though, not all for
the same reasons. So Microsoft is going and pushing Office 365, you have a
monthly subscription or an annual subscription, you get access to their
software. Well if you don't pay up then your licensing, it goes into, it's not, it
doesn't kill the product exactly but it cripples it in certain respects, certainly
important respects. But it's one of those things that, again I think that
that's a form of you can't copy it because it goes along with a login
that's tied to a web service which then they can shut down.
And that's, you know, it's a licensing model.
You could argue that licensing for use of software
is the same kind of thing as licensing
for access to a platform and license,
like your Apple ID is no different.
It's just that you're licensing access to the music
that you've purchased through their system.
Maybe you have a local copy, that's great.
Does it become crippled if your Apple ID expires?
Well, I guess not, but you're still locked
in their platform.
But I saw it as an interesting parallel.
Yeah. I've come around on the notion of software
subscription services like that, though, because, you know,
at the office between Adobe and Microsoft Office and some of the other stuff we
use, it made more sense for us to move to that
model because, you know,
just talking about the bottom line, it was cheaper and easier for us to always
have the latest versions and have support for those things on a, on a
month to month basis than buying a yearly license and then having to debate if we
wanted to update it and then, you know, you're marking the money for that and
doing that stuff.
So I, I think there's tremendous value in, in some of those kind of platform
choices for, for certain types of customers.
But, you know, that gets to a whole other discussion about the notion of
owning anything, owning anything digital, owning any kind of software, any kind of
music. You're, you know, I'm sure if you talk to a lawyer, they'll tell you, well,
you don't really, you never really own it.
You own the license to use it.
And it's another whole rabbit hole we could go down.
Yeah, exactly right.
And I've to some extent come around to on subscription
software as well. And because I've been using Office 365 now for probably getting on about
seven or eight months now. And it's been fine. You know, it's not an issue. Every now and
then he says, Oh, I can't authenticate with this server. Do you want to retry later? I'm
like, yeah. But it always does eventually connect up and authenticate and everyone smiles
and makes happy Excel spreadsheets and Word documents, maybe not the Word documents, but
Anyway, so yeah, it does work.
It does work, yeah.
And I do think that subscription software
is a better model from, you know,
and from a software development point of view as well,
'cause you get a more consistent, reliable income.
But, you know, pros and cons,
but I think ultimately that is also here to stay,
but in any case.
So, I don't know if I had too much else I wanted to say on the topic.
Did you have any other thoughts you wanted to add before we wrap it up?
No, I don't think so.
Like I said, we could go down a million other rabbit holes, but I think that's good for now.
Cool. OK, well, before we do go, before the show ends and is ending in a few more episodes
time, there are only two more after this.
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So, thanks once again everyone for listening and thanks again Seth.
Thanks for having me, it's been great.
(upbeat music)
[Music]
I
Am not kidding you right now that is Siri trying to help me with my ad read. Thank you Siri
God
Siri go die now
Okay.
Okay, lovely. Good. I'm glad we had this chat, Siri.
Moving on.
(laughs)